However, the company will be flexible in making decisions regarding this matter given the evolving circumstances.
“Raw material prices and the supply and demand for semiconductor chips are causing major changes to supply chain costs,” Nio said in a statement.
Another Chinese electric vehicle maker, Xpeng Inc., said it would raise the price of its electric vehicles by up to 20,000 yuan from March 21, 2022.
This step was taken due to an increase in the cost of raw materials, as quoted by Reuters, Saturday (19/3/2022). Xpeng will raise the price of electric vehicles by 10,100 yuan to 20,000 yuan, the company said on its official Wechat account.
Previously, it was reported that new energy vehicles (NEV) in China experienced an increase in selling prices recently. A number of low-end NEV models have also stopped taking orders, the China Securities Journal reported, quoted by China Daily, Tuesday (15/3/2022).
About 20 NEV manufacturers have announced price increases for nearly 40 models since the start of this month, with increases ranging from a few thousand yuan to more than 10,000 yuan.
For example, the prices of the Tesla Model 3 Performance, Model Y Long Range, and Performance all went up by around 10,000 yuan. “The soaring price of upstream raw materials is directly driving up production costs,” said a BYD sales manager in northern China.
“Cutting NEV subsidies is also putting a lot of pressure on producers,” he continued. Lithium, cobalt, nickel and other rare metals – the main raw materials for batteries – have seen price spikes since last year.
Lithium prices hit 500,000 yuan per tonne recently, up more than five times on a yearly basis. Due to soaring production costs, several low-end models have stopped taking orders, such as the Ora White Cat and Black Cat produced by Great Wall Motors, and the BenBen E-Star from Changan Automobile.
Xu Haidong, Deputy Chief Engineer of the China Automobile Manufacturers Association (CAAM), said there are two market strategies for Chinese NEV manufacturers, namely producing high-end models such as Tesla, NIO and XPeng, or exploring low-end markets such as the Ora and Wuling MINI EV.
The price increase alone has not had an impact on the rapid growth of China's NEV market. CAAM showed production and sales of new energy vehicles reached 368,000 and 334,000 in February, respectively, up 2 and 1.8 times on an annual basis.